Features:  Based on the Study Modules  All Important points are covered  With Estimated Time Allotment  Written according to suggestions and requirements  Revised according to amendments applicable for NOVEMBER 2011 exams  Expert‟s Advice portion is added for better clarity. Study Pattern: Step I: Read Study Module Step II: Cross check with Practice Manual Step III: Read this Super Summery

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A.Y. 2011-12


PART I: INCOME TAX INCOME FROM SALARY ................................................................................................................. 3 INCOME FROM HOUSE PROPERTY ............................................................................................... 5 PROFIT & GAIN FROM BUSINESS OR PROFESSION .................................................................... 6 INCOME FROM CAPITAL GAIN ..................................................................................................... 11 INCOME FROM OTHER SOURCES ............................................................................................... 15 CLUBBING OF INCOME ................................................................................................................ 16 SET-OFF & CARRY FORWARD ..................................................................................................... 16 DEDUCTIONS (UNDER CHAPTER VIA) FROM GROSS TOTAL INCOME .................................... 17 RETURN OF INCOME ................................................................................................................... 18 TAX DEDUCTED AT SOURCES (TDS) ......................................................................................... 19 APPENDIX ..................................................................................................................................... 20 INCOME TAX RATES FOR AY 2011-12 ..................................................................................... 20 ASSUMPTIONS .......................................................................................................................... 21 MEANING OF RELATIVES ........................................................................................................ 22 PART II: SERVICE TAX SERVICE TAX AT A GLANCE ....................................................................................................... 23 APPLICABLE SERVICES FOR NOVEMBER 2011 EXAMINATION ................................................ 26 PART III: VALUE ADDED TAX VALUE ADDED TAX (VAT) ............................................................................................................ 32 EXPERT ADVICER CS Richang Garg Pulkit Gupta Sneha Page no. 2 23 34


Richang Garg, Company Secretary

PART I: INCOME TAX  As far as Income tax is concerned, it‟s advisable to read and understand the concepts well. Further only reading is not sufficient because without learning the use of concepts in practical problems one cannot handle the practical problems.  Also in Income Tax study recent amendments brought in by the latest Finance Act. In this paper also you need to know the theory aspects well like dates and amounts to resolve the numerical. In other words if you want to attempt the practical part successfully you have to learn the theory part well.  For preparing Income tax theory I would suggest you to use the book of Girish Ahuja or T.N. Manoharan. Regarding Tax practical questions V.K. Singhania is preferable. PART II & III: SERVICE TAX AND VAT  For IPCC again there is Service Tax and VAT for 50 marks which are very easy to learn. It‟s always better to follow the institute materials for the preparation because all other books may be PCC/IPCC combined and may not have full aspects of service tax and VAT.  Also note one imp point it‟s very easy to finish Service Tax and VAT portion because it is not as lengthy as income tax is.

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A.Y. 2011-12

NCOMETime Allocated – 20 minutes) (Estimated FROM SALARY
Basis of charge [Section 15] Salary is taxable on due basis or on receipt basis whichever is earlier. Gratuity [Section 10(10)] (a) Government employee-Fully exempted (b) Employee covered by Gratuity Act – Minimum of (i) Actual Received (ii)
15 ×Last 26


Drawn Salary  No. of completed years plus excess of six months

(iii) ` 10,00,000 (c) Any other Employees – Minimum of (i) Actual Received (ii)
15 ×Average 30

Salary of 10 months  No. of completed years

(iii) ` 10,00,000 Pension [Section 10(10A)]  Un-commuted pension – Fully Taxable  Commuted pension(a) Government employee – Fully Exempt (b) Non-Govt. employee (received gratuity also) (c) Non-Govt. employee (not received gratuity) 1 of full value of pension 3 1 of full value of pension 2

Leave Salary [Section 10(10AA)] (i) Govt. employee – fully exempt (ii) Non-Govt. employee – Minimum of (a) Actual Received (b) Avg. salary of last 10 months  Balance Leave calculated on the basis of 30 days (c) Average Salary 10 months (d) ` 3,00,000 Retirement Compensation [Section 10(10B)] Minimum of (i) Actual Received (ii) Amount calculated in accordance with Industrial Dispute Act, 1947 (iii) ` 5,00,000 Voluntary Retirement [Section 10(10C)] & Rule 2BA (i) 10 years of service or 40 years of age (ii) For all employees (except directors of the company) (iii) Reduction in number of employees (iv) Not to be filled up (v) No same management (vi) Minimum of (a) Actual amount received (b) Last drown salary  3 months  No.of completed years of services (c) Last drown salary  balance months' service left (d) ` 5,00,000

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m. Notified hospital. employee – (i) Owned by employer  15% of salary (in cities population exceeds 25. employee – as per Govt. Gardener or watchman–Actual cost (ii) Gas.00. Chennai 40% of salary .A.000)  7.m. rules Non-Govt. Group medicine insurance. 10% for completed years (SLM) (2) Perquisites taxable in the hands of specified employees (i) Sweeper.m. (vi) Underground allowances – ` 800 p. @ 20% for completed years (WDV) Other assets-Dep. @ 50% for completed years (WDV) Motor . 08000054359 4 Visit me at: http://bhavinpathak. (3) Fully exempted allowances (i) Foreign (Govt. salary more than ` 50. per child (maximum 2 children) (ii) Hostel expenditure allowances – ` 300 p. (exempt) Specified employees means–Director.000 p.a. (` 1600 for blind/handicapped) (iv) Allowance allowed to transport employees (who not received daily allowance) (a) 70% of such allowance or (b) ` 10.5% of salary (in other place) (ii) Not owned by employer: (a) actual rent and (b) 15% of salary (whichever is less) (B) Valuation of monetary obligation of employee–Actual expenditure (C) (i) Interest free loan–Interest rate of SBI or 12%(exemption loan upto ` 20000) (ii) Use of moveable assets-10% p. (3) Tax free perquisites for all employees (i) Medical facilities Medical treatment in India: Employer‟s hospital.000 but not exceeding 25. per child (maximum 2 children) (iii) Transport allowance – ` 800 p. medical insurance u/s 80D (fully exempt) Any other medical expenditure-maximum of ` 15.5% (Taxable) Employer‟s contribution-Taxable (Salary) Interest on Employer‟s contribution-Taxable (Salary) Interest on Employee‟s contribution-Taxable (Other sources) Allowances (1) Fully taxable allowances (2) Allowance exempt upto specified limit (A) House Rent Allowances [Section 10(13A)] & Rule 2A Minimum of (i) Actual allowance received (ii) Rent paid – 10% Salary (iii) 50% of salary .com Send your views at: pathak.For any other place (B) Actual amount received or amount spent whichever is less (exempt) (i) Travelling (ii) Daily (iii) Conveyance (iv) Helper (v) Academic (vi) Uniform (C) Amount received or the limit specified – whichever is less is exempt (i) Children education allowance – ` 100 p. Employee) (ii) HC or SC Judge (iii) UNO Perquisites [Section 17(2)] (1) Taxable in the hands of all employee (A) Rent free accommodation Govt.a. Delhi.Y. (whichever is less) (v) Tribal area allowance – ` 200 p.00. 20% (beneficial ownership). electricity or water–Actual cost or manufacturing cost (iii) Education facilities–For children ` 1.bhavin@hotmail.m.m.00. of actual cost or actual rental charge (iii) Transfer of moveable asset Computer & electronic items-Dep.000 p.000 p.000) 10% of salary (in cities population exceeding 10. Kolkata.m. Hospital.caclubindia. Govt.m. 2011-12 Provident Fund (i) RPF (ii) Unrecognized provident fund      SUPER SUMMARY OF TAXATION Employer‟s contribution – excess of 12% salary (Taxable) Interest on provident fund – excess of 9.If accommodation is in Mumbai.000 Medical treatment abroad: Medical treatment and stay expenses abroad-exempt (If permitted by RBI) Written by Bhavin Pathak Contact No.

) + Bonus or commission + Taxable Allowances (Estimated Time Allocated – PROPERTY INCOME FROM HOUSE 10 minutes) INCOME FROM HOUSE PROPERTY Basis of charge [Section 22] Annual Value–Building and land apportionment–owner–not use business and profession In case of composite rent – If it is inseparable (PGBP/Other sources) Deemed Owner [Section 27] (1) Transfer to spouse (except agreement to live apart) (2) Transfer to a minor child (except minor married daughter) (3) Individual holds and importable estate (4) Member of co-operative society (5) Part performance of Contract u/s 53A – Transfer of Property Act (6) Lease – Not less than 12 years (7) Dispute – Income received Case I – Let out for full year Step I: MV or FR (higher) Step II: Answer or SR (lower) Step III: Answer or AR (higher) Case II – Let out for full year (sum unrealized rent) Step III: (i) Answer of Step II (ii) Actual Rent of PY less UR (higher) Key Note  Conditions : (i) Bonafide (ii) Tenant has vacant or Steps have been taken (iii) Tanent is not in occupation of any other property (iv)Taken all reasonable steps for the recoveryof upaid rent Case III – Let out for full year (vacancy also) Step IV: Determined value in Step III less [Actual rent per month  Vacant months] Key Note – In Step III Actual Rent for whole of previous year Case IV – Vacancy + Unrealized Rent Written by Bhavin Pathak Contact No.bhavin@hotmail.B.00.000 (2) Professional Tax [Section 16(iii)]-Actual amount paid Relief Available [Section 89] – Step 1 – Step 2 Meaning of salary for Different purpose(1) For entertainment allowances (2) Gratuity for employees (Covered under Gratuity Act) (3) Gratuity for employees (not covered under Gratuity Act) (4) Leave Salary (5) Voluntary retirement compensation (6) Contribution to RPF (7) House rent Allowances (8) Rent free accommodation Basic salary only Basic Salary + DA Basic Salary + DA (if forming part of retirement benefit) +Commission as a fixed percentage turnover Basic salary + DA (for .com Send your views at: pathak.000 (Fully Taxable) (ii) Leave travel concession [Section 10(5)]-maximum of 2 journeys in block of 4 years (20062009) by air/first class air-conditioned in train by shortest distance Deductions from salary (1) Entertainment allowances [Section 16(ii)]-For Govt.00.SUPER SUMMARY OF TAXATION A. 2011-12 Travel expenditure  GTI upto ` 2. employees only Minimum of (a) Actual amount (b) 20% of Basic Salary (c) ` 5.caclubindia.Y. 08000054359 5 Visit me at: http://bhavinpathak.000 (Fully exempt)  GTI above ` 2.

Duty Draw back Value of benefit or perquisite arising from business/profession Salary received by partner of a firm (a) Not carrying out any activity (b) Not sharing any know how Keyman Insurance Policy Any sum received or receivable on account of any capital assets.000  Loan on or after 1/4/1999  Within 3 years acquired or considered  Proof More than one self-occupied property [Section 23(4)] One self-occupied property=Nil (Other deemed let out) Case VI – Self occupied + Let out Actual Rent taken for let out period only. Lighting of stairs PROFIT GAIN FROM BUSINESS OR PROFESSION PROFIT & & GAIN FROM BUSINESS OR PROFESSION (Estimated Time Allocated – 30 minutes) Chargeable under the head business or profession [Section 28] (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) Profits and Gains of Business or profession Compensation: Indian Send your views at: pathak. but municipal tax for the full P/Y Deductions [Section 24] (i) Municipal tax paid by owner (ii) Std. Agency. Trade Union. Interest on borrowed capital. water bill.50. Amount withdrawn from special reserve Method of Accounting [Section 32] Cash system or mercantile system (option to assessee) Two Accounting Standards (AS) in mercantile system AS 1: Disclosure of Accounting Policies AS 2: Prior period and extra ordinary items and charges in accounting policies Written by Bhavin Pathak Contact No. Govt. Interest on fresh loan (allowed.000 (maximum limit) ` 1.000 will be available to each co-owner Property Exempt From Tax One Palace of Ex-Ruler.A. Use of Business or Profession . deduction @ 30% of NAV (iii) Interest on borrowed capital (Accrued basis) Key Note  Interest on pre-construction period- Date of loan to prior to the P/Y (completed)=5 equal instalments Borrowed commission (disallowed). Lift maintenance .000 / ` 1. Balancing charge. One Self Occupied Property. in respect of which deductions has been allowed under Section 35AD Business must be carried on during the P/Y Exceptions: Recovery against loss.bhavin@hotmail.50. Political Party.caclubindia. Salary of gardener. Sale of Scientific Research Assets. Payable outside India without TDS (disallowed) Recovery of unrealized rent already reduced from the annual value for A/Y 2002-03 & onwards [Section 25AA] Unrealized rent recovered less Already taxed earlier (Taxable) Arrears of rent received [Section 25B] Arrears of rent received less Already taxed earlier (Taxable after deducting 30%) Co-ownership [Section 26]  Provision of self-occupied property will apply to each co-owner  Deduction upto ` 30. Interest on unpaid interest (disallowed). Cash assistance against exports. Profit on import licence. Charitable Purpose. Liftman salary. 08000054359 6 Visit me at: http://bhavinpathak. Hospital Composite Rent Actual Rent Received less Electricity bill. Recovery against bad debts. any other company in India. 2011-12 SUPER SUMMARY OF TAXATION Case V – Self acquired property Net Annual Value  NIL Deduction  Interest on capital borrowed  ` 30.Y.

it is claimed depreciation under section Send your views at: pathak. Opening value of block b. Motor car for Business  . no deduction in one P/Y Short Term Capital Gain for Depreciable Asset When entire block are not transferred: Consideration for transfer less Expenses of transferred. it is taxable as STCG.bhavin@hotmail. 08000054359 7 Visit me at: http://bhavinpathak. If asset purchased during the relevant P/Y  Put in to use less than 180 days (dep. Cost of transfer STCG/STCL . Assets eligible for dep. taxes. @ 100% of normal rate b. Computer  60%. Motor car for Hire  30%. not installed in office. @ 50% of normal rate Less: Money payable in respect of assets sold/discarded/demolished/destroyed during P/Y Subject to maximum of (i)+(ii) WDV at the end of P/Y [Section 43(6)(c)] Less: Depreciation for the P/Y Depreciated value at the end of P/Y …… …… …… …… (……) …… (……) …… Computation of STCG/STCL Sale consideration of those depreciable assets which have been transferred during the P/Y and which fall in the same block of asset (whether received in cash or not) Less: Total of following three a. Books for profession and library  100%.  If the difference is loss..caclubindia.. plant & furniture [Section 31] Only revenue expenditure A. Opening WDV.Y. 50% of prescribed rate) Computation of Depreciation Depreciated value of block at begging of P/Y (i) Add: Cost of asset put to use during the P/Y (ii) a.. rates... Non-residential  10%. repairs and insurance for buildings [Section 30] Repairs and Insurance of machinery. Purchase  If the difference is profit. …… …… ……. Ships  20% Intangible assets  25% Additional Depreciation [Section 32 (1)(iia)] Only for manufacturing business  any new machinery or plant (other than ships and aircrafts) installed after 31/3/2005  @ 20% of annual cost Condition: No second hand. Assets eligible for dep. no road transport vehicle. 2011-12 Depreciation [Section 32] Owner  Asset must use in business/profession  relevant P/Y  eligible asset  WDV method Block of Assets [Section 2(ii)]: Same nature  Same Rate Rates of depreciation for various block of assets (I) (II) (III) (IV) Building: Residential  5%. Temporary residential  100% Furniture & Fittings 10% Plant & Machinery: General Rate 15%.SUPER SUMMARY OF TAXATION Admissible Deduction [Section 30-37] Rent. (……) …… Depreciation for undertaking engaged in generation & distribution of power WDV or SLM (option of assessee) Consequence if the above assets are sold Depreciation on the basis of WDV: Same treatment as done in Block concept Depreciation on the basis of SLM: (i) WDV – Sale Price = Terminal Depreciation (allowed in PGBP) (ii) Sale price (not more than actual cost) – WDV = Balancing charge (Taxable in PGBP) (iii) Sale price (more than actual cost) – Actual Cost = Capital Gain Written by Bhavin Pathak Contact No. Cost of capital acquired during the P/Y c.

expenditure of prospectus Expenditure in case of amalgamation or demerger [Section 35DD] Indian company  5 instalments Written by Bhavin Pathak Contact No. limit) Common provision in case of Section 33AB/33ABA Deduction withdrawn  Purchase for office or residence. direct expenditure incurred on eligible project (For Company only) (2) Amount deduction  Actual payment or actual expenditure (3) Withdrawal of exemption  Project is not being carried on accordance with condition of national committee. 08000054359 8 Visit me at: http://bhavinpathak.Y. warehousing facilities for storage of agriculture produce. market survey. legal charges. drafting and printing of MoA & AoA.A. 2011-12 SUPER SUMMARY OF TAXATION Set-off and carry forward of unabsorbed depreciation [Section 32(2)] Same head  any head of income other than salary  carry forward to any number of years Tea Development Account [Section 33AB] Applicable Time Limit Deposit Deduction Tea or Coffee or rubber Six months of end of P/Y or before ROI NABARD or TCR board 40% of profits of such business (max. National Urban poverty Eradication Fund Preliminary Expenses [Section 35] (1) Applicability  Indian company or Non-corporate resident assessee (2) Before commencement of business  For setting up of any business After commencement of business  Extension or setting up new undertaking (3) List of specified expenditures  Feasibility Report. Approved bodies Unabsorbed expenditure  Same Treatment as unabsorbed depreciation Expenditure on acquisition of Patent Rights or Copy Rights [Section 35A] Before 1/4/1998  Allowed in 14 equal annual instalments On or after  Depreciation at 25% (WDV) Expenditure for obtaining Telecommunication License [Section 35ABB] Amount of deduction  Amount paid Remaining period of license Donation for Eligible Project [Section 35AC] (1) Eligible expenditure  Payment to public sector company. IIT. local authority. issue of shares and debentures.caclubindia. university. including storage facilities [Section 35AD] Donation for Rural Development [Section 35CCA] National fund for Rural Development. underwriting commission. approved association. limit) Site restoration fund A/c [Section 33ABA] Petroleum or natural gas Before end of P/Y SBI or Scheme of Ministry of P & G 20% profit of such business (mix. and cross-country natural gas or crude or petroleum oil pipeline network for distribution. office appliances (other than computer) Deduction allowed  in one year. registration fees. engineering . XIth Schedule. project report. Report nor furnished to the national committee Investment-linked tax incentive for specified business-cold chain facilities. sale before 8 years from end of P/Y Expenditure of scientific research [Section 35] (1) Expenditure incurred by the assessee (A) In all cases of in house research  100% (other than cost of any land) Any expenditure during 3 years immediately preceding the year of commencement of business  100% (other than cost of any land) (B) In case of companies in specified business  200% (except land and building) Special business: Bio-technologies or companies engaged in the business of manufacturer or production of an article or thing except those specified in the XIth Schedule of the Income Tax Act (2) In case of contribution to outsiders  175% (whether or not research related to assessee business) Any national Send your views at: pathak.

Y. 08000054359 9 Visit me at: http://bhavinpathak. bonus to working partner: Specified Profession Firm Other Firm On the first ` . Interest..50. book adjustment.000) otherwise Account Payee cheque or Demand Draft  100% disallowed Exceptions: Payment made to bank and financial institutions. for resident (without TDS) (3) Fringe benefit tax (4) Income tax/Dividend tax (5) Wealth Tax Disallowance for Partnership firm [Section 40(b)]  Payment of interest to any partner  as per deed 12% p.caclubindia. etc.a. Banking Holiday. Commission.SUPER SUMMARY OF TAXATION A.000 of the book profit or ` 1.bhavin@hotmail. Govt.000 [Section 40(A)(3)] Payment in excess of ` 20.000 (for transporter ` 35.00. Dairy. actual payment of gratuity (allowed) Written by Bhavin Pathak Contact No. Send your views at: pathak. Cottage Industry (without aid of power) Disallowance or provision for gratuity [Section 40A(7)]  Provision for Gratuity  Approved gratuity fund (allowed). (whichever is lower)  For payment of salary. whichever is more On the balance of the book profit 60% of book profit Payment to specified persons [Section 40A(2)] AO may disallowed  excessive or unreasonable (fair market value) Cash Payment in respect of expenditure exceeding ` 20. village not served by any bank. producer of agriculture. Poultry farm. Employees (not exceed ` 50. etc. Royalty. for non-resident (without TDS) (2) Interest.000 or at the rate of 90% of the book in case of loss profit. 2011-12 Expenditure incurred under Voluntary Retirement Scheme (VRS) [Section 35DDA] Any assesse  5 equal annual instalments Expenditure on prospecting for certain minerals [Section 35E] Account of deduction  1 th 10 of expenditure or Income from such prospecting (lower) Other Deduction [Section 36(1)] Insurance premium on stocks  allowable only in year of payment Insurance premium on life of cattle  allowable only in year of payment Insurance premium paid on health of employees  payment made by any mode other than cash Bonus or commission paid to employees  on or before due date of filing return [Section 43B] Interest paid on borrowed capital  Actual Interest Employers contribution to RPF  on or before the due date of ROI Contribution to approved gratuity fund  on or before the due date of ROI Contribution from employees  on or before the due date under the relevant Act Amount of deduction = Actual cost of animal less Amount realized on sale of animals Bad debts  only actual bad debts allowed (provision for bad debts disallowed) Provision for bad and doubtful debts for rural branches of Banks and co-operative banks Special reserve created by Financial Corporations Family planning expenditure  only for company assessee  Revenue expenditure  fully allowed  Capital expenditure  Allowed in 5 years in equal instalments  Unabsorbed family planning expenditure  same manner as unabsorbed depreciation (14) Treatment of discount on zero coupon bonds  Allowed proportionately (15) Securities Transaction Tax (STT)  Allowed as a deduction (16) Special deduction for reserve (maximum 20%)  allowed to national Housing Bank (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) General Deduction [Section 40 (a)] Expenditure only for business or profession  revenue nature  during the P/Y  not covered by Section 30 to 36  No personal expenditure Disallowed Expenditures [Section 40(a) – 43B] Expenses not deductible [Section 40(a)] (1) Salary.000).

CA. 44AD + Sec. Original Bill for expenditure exceeding `.m. contribution to PF Maintenance of accounts by person carrying on profession or business [Section 44A & Rule 6F] Business assesse (Other than notified profession): Income from business or profession exceeds ` 1. Whose total turnover or gross receipts in the previous year does not exceed an amount of sixty lakh rupees. a sum equal to 8% of the total turnover or gross receipts of the assessee in the previous year on account of such business or.Y. Effect of this amendment: Now not only retail business but all business covered so scope of this section is very wide. Medicine Inventory Register (ii) In other cases: Assessee is required to maintain such books of account and other documents as may enable the Assessing Officer to compute income (i) Compulsory Audit of Accounts [Section 44AB] (1) Applicability  (a) For business total sales or gross receipts exceed ` 60.000 (c) Business referred to u/s 44AD/AE/AF and declaring lower income (2) Filling of report  Audit report of CA on or before 30th September of the relevant A/Y (3) If accounts audited under any other law  Report with audit report under any law (4) Consequence of non-compliance  Defective return [Section 139(9)] Presumptive income in case of Specific Business or Profession [Section 44AD/AE/AF] Civil construction [Section 44AD]: 8% or more of gross turnover Business of plying and leasing goods carriages [Section 44AE]: Heavy goods vehicle ` 5. as the case may be. 44AD) (1) Deduction under Section 30-38 (deemed to be allowed) (2) Depreciation (deemed to be allowed) (3) Turnover for under Section 44AB (not to considered) (4) Option for lesser amount (Section 44AA & 44AB applicable) (5) Partner‟s – Interest.000. Notified Professions: Profession of Law. Interest on loans from scheduled bank or any public financial institution. 44AF = Sec. Journal. . Ledger. cess. and other ` 4. and 2. that just because of this amendment . In any of 3 preceeding P/Y or likely to exceeds in case of newly setup business or profession.00. which means that profession is totally separate from Business. Send your views at: pathak. 08000054359 10 Visit me at: http://bhavinpathak.000 (b) For profession gross receipts exceeds ` 15.A. Assessee is required to maintain  books of account and other documents (for computation of income) (ii) Not required to maintain any books if specified amount are not exceeded. a new ITR has come called “Sugam”  Eligible Business: 1.20. accounting. That is also evident from the fact . Or Total sales/gross receipts exceeds ` 10. (i) Gross receipts exceeding ` 1.caclubindia.500 p.000 (in all three years immediately preceeding the PY or likely to exceed if the profession is newly setup) Assessee is required to maintain: Specified books  Cash Book. Any business except the business of plying. etc. Carbon Copies of Bills exceeding ` 25. 50 In case of medicine profession: Daily Cash Register. hiring or leasing goods carriages referred to in section 44AE. salary (allowed) (6) Deduction under Section 80C-80U (allowed) Amendment 1: Section 44AD & Section 44AF Notwithstanding anything to the contrary contained in Sections 28 to 43C. any bonus or commission or leave encashment to employees. 2011-12 SUPER SUMMARY OF TAXATION Deduction based on actual payment [Section 43B] Certain deduction are made only on actual payment on or before the due date of ROI  Any tax.bhavin@hotmail. engineering. a sum higher than the aforesaid sum claimed to have been earned by the eligible assessee.m. in the case of an eligible assessee engaged in an eligible business*. Written by Bhavin Pathak Contact No. or part of a month (Maximum 10 goods carriage) Common provisions in case of Section 44AD (Sec. shall be deemed to be the profits and gains of such business chargeable to tax under the head Profits and gains of business or profession.000 p. duty. There is specific Turnover limit of ` 15 Lakhs for Profession under Section 44AB.

Compulsory Acquisition. Part Performance of Contract (Transfer Of Property Act). personal effects (except jewelry. Extinguishment. units of mutual fund.e.Y. Conversion of Capital Assets. Whose total income exceeds the maximum amount which is not chargeable to income-tax Amendment 2: Section 44AE  Plying. leasing or hiring of trucks (person should not own over 10 goods carriage at any time during the previous year)  ` 5. 50% voting power 5 years Written by Bhavin Pathak Contact . 08000054359 11 Visit me at: http://bhavinpathak.000 per month/ part of month for each heavy goods vehicle. listed securities.500 per month/ part of month for each light goods vehicle. archeological collections etc.SUPER SUMMARY OF TAXATION A.caclubindia. 2011-12 The assessee is bound to get the books of accounts Send your views at: pathak. debenture.bhavin@hotmail. Zero Coupon Bonds (ii) Long term capital assets  A capital assets which is not a short term capital asset Transfer [Section 2(47)] Sale Exchange. partners received only by shares. University.). National art Gallery. Rural agriculture land in India Types of Capital Assets (i) Short term capital assets  Holding period not more than 36 months Exception  Holding period not more than 12 months Equity or preference shares.  ` 4. Notified by CG) (12) Conversion of Bonds. his net profit is lower than 8% of turnover And 2. Relinquishment. capital ratio. Enjoyment Of Immovable Property Meaning of Zero Coupon Bond [Section 2(48)] (a) Issued (on or after 1/6/2005)  Infrastructure capital company or infrastructure capital fund or public sector company or scheduled bank (b) No payment and benefit  before maturity or redemption (c) Central government  Notification in the Official Gazettee Transaction which are not considered as transfer [Section 47] (1) Partition of HUF (2) Gift or will or irrevocable trust (exceptESOP) (3) Holding company to its Indian Subsidiary company (Condition100% shareholding) (4) Subsidiary company to its Indian Holding company (Condition100% shareholding) (5) Amalgamation company to its Indian amalgamated company (6) Amalgamation of a company with a Banking Institutions (7) Demerged company to its Indian resulting company (8) Transfer of shares by resulting company to the shareholders of demerged company (9) Shares of amalgamated company to shareholder of amalgamated company (10) Transfer made by one non-resident to another non-resident (outside India) (11) Transfer (Government. if the following two conditions are satisfied: 1. Notional Museum. Redemption of Zero Coupon Bonds. (Estimated Time Allocated – 20 minutes) INCOME FROM CAPITAL GAIN INCOME FROM CAPITAL GAIN Basis of charge [Section 45(1)] Capital assets  Transfer  P/Y  Capital Gain  Exemption u/s 54-54H (applicable) Capital Assets [Section 2(14)] Includes  Property of any kind whether or not connected with business or profession Excludes  Stock in trade. His profits and gains from the eligible business are lower than the profits and gains specified in sub-section (1) i. deposit certificate into shares or debentures of that company (13) Transfer of land by Sick Industrial company (managed by its own co-operative) (14) Transfer of capital assets of a firm into company Condition: All assets/liabilities.

08000054359 12 Visit me at: http://bhavinpathak. Exemption u/s 54-54H Cost of acquisition and Improvement [Section 55]  In case of right to manufacture.Y. 54D & 54G (ii) Computation of Long Term Capital Gain: Full value of consideration Less Transfer expenses.bhavin@hotmail. + dividend/interest As above (excluding brokerage) NIL FIFO method FIFO method Offer Price Offer price + Amount paid for renouncement NIL NIL (2) (3) (4) (5) (6) (7) (8) Financial asset acquired without any payment Section 45(1A) 45(2) Computation of Capital Gain in Special Cases Nature of Transaction Insurance claim on loss of assets Conversion of capital assets into Stock-in-trade (Key note: Indexation based on year of . & com. ICOI. not on year of sale) Sale of shares held as depository (FIFO method) Introduction of capital assets by partner into firm Computation of Capital gain Insurance claim received Less COA or COI FMV of the capital asset on conversion Less COA or ICOA Business income= Sale consideration Less FMV considered as above Consideration for transfer Less COA or ICOA Amount credited in partners‟ capital a/c in the books of the firm Less COA or ICOA 45(2A) 45(3) Year of transfer Year of distribution Written by Bhavin Pathak Contact No. COA.caclubindia. Route permits and loom hours. ICOA. Exemption u/s 54B. produce any article or goodwill of a business Nil (if self-generated by assessee or provision Send your views at: pathak. 2011-12 Comparison of Capital Gain [Section 48] (i) Computation of Short Term Capital Gain: SUPER SUMMARY OF TAXATION Full value of consideration Less Transfer expenses. COI.) COA  Cost to assessee/ Previous Owner (if required/purchase) Nil COI   In case of Tenancy rights.) COA  Cost to assessee/ Previous Owner (if required/purchase) Expenses incurred by assessee or previous owner COI  Goodwill of profession is not taxable Cost of Acquisition of different types of shares [Section 55] Date of acquisition/Holding Particulars of Assets Period (1) Shares originally purchased: (a) Primary market (b) Secondary market (i) Transaction trough share broker (ii) Transaction between parties directly Bonus share Shares acquired in different lots at different point of time Shares held in depositary system (taxable in hands of beneficial owner) Right shares offered to existing shareholders and subscribed by them Right share acquired by a person by way of renouncement Renouncement of right shares in favour of another person Date of Allotment Date of broker‟s note Date of contract of sale Date of allotment FIFO method FIFO method Date of allotment Date of allotment Holding period is date of offer of such right to the date of renouncement (always STCG) Date of allotment of such financial assets Year of taxability Year of receipt of claim Year of transfer converted stock of  B. Srinivas Setty (SC) Cost of Acquisition Allotment price Amount paid + Brokerage charges + Adjustment for exp. trademarks or bond name Nil (if self-generated by assessee or provision owner.A.

2011-12 FMV on date of transfer Less COA or ICOA Year of first receipt (b) Enhanced compensation 45(6) 46 Redemption 80CCB Units Receipts of Assets / cash from company on liquidation Year of receipt of claim Year of repurchase Year of receipt 46A 50B 50C Repurchase/bay back of shares /Specified securities Sale or undertaking as a going concern or Slump sale Transfer of land or building or both at less than stamp duty authority value Year of repurchase Year of transfer Year of transfer Whole of normal compensation received or receivable Less COA or ICOA Enhanced compensation Less Expenses incurred Repurchase price Less Amount invested (no indexation) FMV of asset received Add Amount received in Cash Less Deemed dividend u/s 2(22)(c) Less COA or ICOA of hares Consideration for transfer Less COA or ICOA Lump sum consideration Less Net worth Value determined by stamp duty authority Less COA or ICOA Advance money forfeited [Section 51] Cost of assesse Less Forfeited by the assessee Reference of a valuation officer [Section 55A] (i) Sale consideration<FMV (ii) Difference between FMV and sale consideration (more than ` 25.Y.SUPER SUMMARY OF TAXATION 45(4) 45(5) Distribution of capital asset by partners/ members on dissolutions of firm/AOP/BOI Compulsory acquisition of capital asset by Government (a) Normal compensation Year of first receipt A.000 or 15%) Exemption on compulsory acquisition of agriculture land [Section 10(37)] Individual or HUF  Holding period 2 year or more  Consideration determined by CG or RBI  on or before 1/4/2004 Exemption on LTCG from Shares [Section 10(38)] Transfer on or after 1/10/2004  Through recognized stock exchange  security transaction tax applicable Tax on STCG from shares @ 15% [Section 111A] Transfer on or after 1/10/2004  Through recognized stock exchange  security transaction tax applicable Tax on LTCG from listed securities [Section 112] Tax @ 20% on LTCG after Indexation or @ 10% on LTCG without indexation (whichever is less) Written by Bhavin Pathak Contact Send your views at: . 08000054359 13 Visit me at: http://bhavinpathak.

2011-12 Use of Holding period SUPER SUMMARY OF TAXATION Exemption from Capital Gain [Section 54/54B/54D/54EC/54F/54G/54GA] Prescribed period for investment Sec. 54D except that under section 54F will be taxed as LTCG 54 Residual House Individual or HUF Exceeding 36 months Capital Gain Residual House Capital Gain or amt. after the date of transfer As Above Same as per Section 54 Written by Bhavin Pathak Contact No. Asset transferred Who is entitled Amount to be invested New Asset Exemptions Treatment of unutilized amount Sale of new asset If sold within 3 yrs. after transfer in case of construction Within 1 . after the date of transaction in case of new consideration Deposit in Capital Gains Account Scheme before due date of furnishing the return of Income 54B 54D Agricultural Land L & B for industrial Undertaking Individual Any assessee Use for 2 yrs. or within 3 yrs. 54B & 54D Capital Gain or amt. after transfer Within 3 yrs. invested whichever is less As Above Same as for Section 54. the cost of new asset shall be reduced by the amount of CG claimed as exempted As Above As Above If sold within 3 yrs. invested whichever is less (maximum ` 50 lakh during any financial year Within 6 months of transfer of original asset Not Applicable 54F Any asset other than residual house Individual or HUF Should be LTCA. after the date of transfer in case of purchase. or within 3 yrs. 54B. exempted Capital gain will be deemed to be the income of the assessee in the yr. Should not own more than one house on the date of transfer Net consideration Residual House Capital Gain Amt. after the date of transfer Deposit in Capital Gains Account Scheme before due date of furnishing the return of Income 54G P & M or L&M for industrial undertaking in urban area Any assessee May be LTCA or STCA Capital Gain 54GA P & M or L&M for industrial in urban area Any assessee May be LTCA or STCA Capital Gain P & M or L & B used for industrial undertaking in nonurban area or meeting expenses of shifting P & M or L & B used for industrial undertaking in SEZ or meeting expenses of shifting Capital Gain or amt. from the date of purchase/ construction for the purpose of computation of STCA on the new Send your views at: pathak.bhavin@hotmail. Within 1 yr. before or 2 yrs.A. for agriculture Use for 2 years Capital Gain Capital Gain Agricultural land L & B for industrial undertaking As Above As Above Within 2 yrs. before or within 3 yr.caclubindia. after transfer As Above As Above 54EC Long term capital asset Any assessee LTCA Capital Gain Bonds issued on or after 1/4/2007 by NHAI or RECL Capital Gain or amt. before or within 3 yr. invested whichever is less Within 1 yr.Y. after the date of transfer in case of purchase. Invested Net consider. invested whichever is less Within 1 yr. of sale of new asset Sale as for Section 54. before or 2 yrs. 08000054359 14 Visit me at: http://bhavinpathak.

com Send your views at: pathak. he will be able to avoid payment of tax on interest  In such case as per Section 94 interest would be deemed to be the income of transferor and not Transferee.000 the whole of such amount (except-relative. 2011-12 INCOME FROM OTHER SOURCES INCOME FROM OTHER SOURCES (Estimated Time Allocated – 8 minutes) Basis of charge [Section 56(1)] Income not related to any head Specified Incomes [Section 56(2)] (i) Dividend. (c) Distribution of accumulated profit to shareholders on liquidation. in comparison of death of the payer) Deemed Dividend [Section 2(22)] (a) Any distribution by company. 15000 employee.33% of pension whichever is lower (ii) Rs.caclubindia. Standard deduction to legal heirs is allowed.SUPER SUMMARY OF TAXATION A. winning from lotteries. races. (i) 33. interest on securities.Y. Example: (a) If there is not avoidance of Income Tax or (b) The avoidance of Income Tax was exceptional and bot synergic and there was no avoidance of income tax of three proceeding years. (b) Distribution of debenture. (e) Any advance / loan by a private company to equity shareholder (10% voting power) or any concern (in which such member is have been not less than 20% voting power) Rate of tax in case of winning from lottery . under a will. occasion of marriage. 08000054359 15 Visit me at: http://bhavinpathak. (d) Distribution on reduction of share capital. [Section 155BB] 30% of such income + 2% education + 1% SHEC Interest on securities (Rates of TDS) Types of Security Rate of TDS (i) CG/SG securities No TDS (ii) Listed securities 10% (iii) Unlisted Securities 20% Note: In case of tax free non-government securities  Grossing Up of interest Bond Washing Transaction  If owner of any securities sells it just before due date and again acquires them after due date. taxable under the head “other  Written by Bhavin Pathak Contact No. (ii) Where any some of money / any property / movable property exceeding ` 50. incomes from letting machinery or furniture along with building and only machinery or furniture. card games. Family Pension [Section 37(iia)] Family pension received by legal heir of deceased source. Send your views at: pathak.A. 08000054359 16 Visit me at: http://bhavinpathak. Same Source under same head NA Set-Off Inter-source under same head NA Inter-Head NA Carry Forward For Assessment Year NA 8 years 4 years 4 years 8 years 8 years Set-Off From NA Same head Same head Same head Same head Same head                Except from Salary       Capital Gains Other Sources Written by Bhavin Pathak Contact No.bhavin@hotmail. 2011-12 SUPER SUMMARY OF TAXATION (Estimated Time Allocated – 8 minutes) CLUBBING OF INCOME CLUBBING OF INCOME Transfer of income without transfer of assets [Section 60] Taxable in hands of transferor Revocable transfer of assets [Section 61] Taxable in the hands of transferor Remuneration of a spouse from a concern in which the other spouse has substantial interest other than for excising professional knowledge [Section 64(1)(ii)] Clubbed in the hands of individual Income from assets transferred to the spouse for inadequate consideration [Section 64(1)(iv)] Clubbed in the hands of individual Income from assets transferred to the son’s wife for inadequate consideration [Section 64(1)(vi)] Clubbed in the hands of individual Income from assets transferred to any person for the benefit of the spouse of the transferor [Section 64(1)(vii)] Clubbed in the hands of individual Income from assets transferred to any person for the benefit of the son’s wife of the transferor [Section 64(1)(vii)] Clubbed in the hands of individual Clubbing of income of a minor child [Section 64(1A)] In the hands of parents whose total income is higher or the person maintained minor Income from self-acquired property concerted to joint family property for inadequate consideration [Section 64(2)] Clubbed in the hands of individual SET-OFF & CARRY FORWARD SET-OFF &Time AllocatedFORWARD CARRY – 6 minutes) (Estimated Nature of Income Salary Non-Speculation PGBP Speculation Owning & maintenance race horses Short Term Long Term Winning from lottery etc. Interest .

com Send your views at: pathak.000 Least of whole of such income of ` 3. contributions to .000 (fixed) General: Actual or ` 40.m.000 (fixed). Severe Disability: ` 1. industrial park.00. telecommunication. marketing agricultural produce.000  Consumer‟s co-operative society ` 1.000 (fixed) Severe Disability: ` 75. paid or 10% of salary (lower) [Self-employees max.00.Y. of such income Next 5 years : 50% (10% of Adj. 80C 80CCC 80CCD 80CCE 80CCF 80D 80DD 80DDB 80E 80G Applicability Individual/HUF Individuals CG or other or self-employees 80C+80CCC+80CCD Individuals/HUF Individuals/HUF Resident Individual/HUF Resident Individual/HUF Individuals All Assessees DEDUCTIONS (UNDER CHAPTER VIA) FROM GROSS TOTAL INCOME (UNDER CHAPTER VIA) FROM GROSS TOTAL (Estimated Time Allocated – 14 minutes)INCOME Nature of Payment/Receipt Life insurance premium.00.000 (lower) Amt. not own any residential at work space Donations Donation to Political Party or Electoral Trust Donation to Political Party or Electoral Trust Infrastructural facility. total income (ii) 25% of Adj.00. ` 1.000 General: ` 50.000 Least of whole of such income of ` 3. fishing of the 80GGA 80GGB 80GGC 80IA 80JJA 80JJAA 80LA 80P All Assessees (no PGBP income) Indian Companies Other than Indian Company (except local authority. Health Scheme amended for AY 2011-12 Expenditure on handicapped relative Expenditure on specified diseases (CGHS) dependent Interest on payment of loan taken for Higher Education Deduction in respect of Donation 80GG Individuals Assessee should not be entitled to HRA.00.000 (whichever is less) Actual Interest (maximum 8 assessment year)  100% deduction without Qualifying Limit  50% deduction without Qualifying limit  100% deduction without Qualifying limit  50% deduction without Qualifying limit Minimum of (i) Rent paid less 10% of Adj. donated 100% of profit for 10 years 100% of profit for first 5 Assessment years 30% of Additional wages for 3 years First 5 years :100%.00. ` 1.000 (whichever is less) Senior citizen: Actual or ` 60. etc. 08000054359 17 Visit me at: http://bhavinpathak.000 Senior citizen: Premium paid or ` 20. 10% of GTI] Max. distribution of power Business of processing of Bio-degradable waste Deduction for additional employment Income from Off-shore banking unit Cottage industries.00. AJP) Industrial Undertaking All Assessees Indian Companies Off shore banking units of banks Co-operative society  80QQB 80RRB 80U Resident Individual Royalty income from book Resident Individual Income from patent registered after 1/4/2003 Handicapped Resident Individual  Co-operative society engaged in other activities ` 50.000 (fixed) Written by Bhavin Pathak Contact No.000 (lower) and For parents ` 15. (iii) ` 2000 p.000 General: Premium paid or ` 15. Contribution to certain pension funds Contribution to CG pension schemes Amount of deduction Max.000 (lower) Disability: ` 50.000 Amt.bhavin@hotmail. 2011-12 DEDUCTIONS Sec.SUPER SUMMARY OF TAXATION A. Total Income . paid or ` 1. Just like to Section 35/35CCA/35AC Actual amt. ` 20. total income) Long-term infrastructural bonds Central Govt.000 Max. donated Actual amt.caclubindia.

where a/c are audited (ii) Working partner of a firm (a/c are audited) (b) In any other case 139(1A) 139(1B) 139(3) 139(4) 139(4A) 139(4B) 139(4C) 139(5) 139(6) 139(6A) 139(9) 139A Bulk Return Filing of Return readable media Return of loss on Computer 30th September of AY 30th September of AY 30th September of AY 31st July of AY Filing of return through employer (Floppy. HUF  Karta. audit report u/s 44AB. CD ROMS etc. Company  MD. Trade Union Within 1 year from the end of relevant AY or before completion of assessment (earlier) Belated return cannot be revised [Kumar Jagdish Chandra Sinha (SC)] Income exempt from tax. CD ROMS etc. expenditure excess the limit Name and address of principal place and .Y. University Hospital. 08000054359 18 Visit me at: http://bhavinpathak. assets. Statement.bhavin@hotmail. LLP-Designated Local Authority  Principal officer. Magnetic cartage Tape. 2011-12 SUPER SUMMARY OF TAXATION RETURN OF INCOME RETURN OF INCOME (Estimated Time Allocated – 12 minutes) Sec. Professional institution. Institution for development of Khadi.000 (iii) Charitable Trust (iv) Return of fringe benefit Individual  himself. firm. Political Party  CEO. or any other computer readable media File within time specified in Section 193(1) If return of loss is not filed then following loss cannot be carried forward (i) Business loss (ii) Capital loss (iii) Owning and maintenance race horses loss Within 1 year from the end of relevant AY or before completion of assessment (earlier) Before allowing exemption u/s 11 & 12 exceeds the basic exemption limit Before allowing exemption u/s 13A exceeds the basic exemption limit Scientific Research.00. Firm  Managing Partner. bank account & credit Send your views at: pathak. computation of the tax. Diskette. partners or members Profit share of partners or members. Diskette. Audit report under Section 44AB Annexure. Audit u/s 233AB of Companies Act (i) Total Income greater than Basic exemption limit (ii) Gross turnover/receipt greater than ` 5. proof of TDS and advanced Tax Account.) Floppy. AOP  Principal officer Company. News agency. Magnetic cartage Tape. a person other than company or firm if its total income exceeds the maximum amount which is not chargeable to Income Tax Belated return Return of charitable trust Return on behalf of Political Party Return of Income of certain associations Revised Return of income Other Assessee Particulars to be business assessee Defective return furnished by Permanent Account Number (PAN) 140 Signing of return Written by Bhavin Pathak Contact No.caclubindia.A. 139(1) Particulars Return of Income: Due Date: (a) Where the assessee is company (i) Other than co.

000 Dividend referred in Section 115O 194LA 195 Any resident Person Non-resident foreign company 10% As Specified by Finance Act Written by Bhavin Pathak Contact No.: 20% Others: 10% 10% 20% 20% 10% Exemption Limit Basic exemption applicable to individuals (` 1.000/ ` 1.a.60.000 ` 5.000 in a financial year (ii) Payee is Govt. Security Upto ` 2. (i) ` 5.000) Exempted for certain listed securities u/s 193. NIL ` 2.000 p.90.000/ ` 2.a. 2011-12 TAX DEDUCTED Allocated – 14 minutes) (Estimated Time AT SOURCES (TDS) Sec.: 10% Other: Listed debentures 10% Non-listed debentures: 10% 20% Domestic co.caclubindia. Nature of payment Who is liable to deduct tax? Employers Type of Recipient Rates of TDS Rates of tax as applicable to the individual Domestic co.000 if payment made by Banking co.000 p. post office. aggregate ` 20. ` 5.500 or payment is made to heirs of the deceased assessee NIL ` .a.contractor Insurance commission Payment to non-resident sportsmen or sport association of income referred to sec.00. 08000054359 19 Visit me at: http://bhavinpathak. ` 10. co-operative society.000 if payment made by any other person.80.000 per contract value or credit less than ` 75.000 in a financial year Aggregate of such payments during the FY does not exceed `1. Listed Debentures: ` 2.000 p.bhavin@hotmail./Local authority 194J Professional or Technical fees Compensation/ Enhanced compensation on compulsory acquisition Interest..: 10% Other: 10% 30% 30% Individual/HUF: 1% Other: 2% Domestic Co.000 (ii) Commission payable by BSNL or MTNL TAX DEDUCTED AT SOURCES (TDS) 192 Salary Employees 193 Interest on securities Payer of Interest of securities Domestic company All assessee except Individuals and HUF who are not subject to audit u/s 44AB during prior PY Any Person Any Person All assessee except Individuals and HUF who are not subject to audit u/s 44AB during prior PY Any Person Any Person Post office Mutual funds or UTI Any Person All assessee except Individuals and HUF who are not subject to audit u/s 44AB during prior PY All assessee except Individuals and HUF who are not subject to audit u/s 44AB during prior PY All assessee except Individuals and HUF who are not subject to audit u/s 44AB during prior PY Any person Any person A resident person 194 Dividend u/s 2(22)(c) Interest other than interest on securities Winning from lotteries/ crossword puzzles Winning from horse race Payment to contractor or sub.500 during a FY in case of an individual ` 10. 155BBA National saving scheme Repurchase of units Commission on sale of lottery Commission on brokerage Resident 194A A resident person 194B 194BB 194C Any Person Any Person Any person resident in India Resident Assessee Non-resident: Sportsmen being foreign Send your views at: pathak.40.000 ` 30. Furniture:10% (i) ` 1.Y.500 De-mat. or Sport association Any Person Unit holder u/s 80CCB Any resident Person 194D 194E 194EE 194F 194G 194H Any resident Person 10% 194I Rent Any resident Person Rent of P & M: 2% Rent of L & B.SUPER SUMMARY OF TAXATION A. or any other sum (other than income taxable as “Salaries”) Any resident Person 10% ` 30.

card games etc.00.000 Rate 30% 40% Surcharge „Education Cess‟ @ 2% & „Secondary and Higher Secondary Education Cess (SHEC)‟ @ 1% on income tax shall be chargeable 10% ` 1. 2.00.60. of the amount total income of the amount total income No surcharge shall be levied in the case of a co-operative society „Education Cess‟ @ 2% & „Secondary and Higher Secondary Education Cess (SHEC)‟ @ 1% on income tax shall be chargeable In case if any firm (including LLP) Note: 1.000 In case of every co-operative society Where income does not exceed ` 10.010 to ` 5.000 Note: 1.00.00. 30% No surcharge shall be levied in case of firm „Education Cess‟ @ 2% & „Secondary and Higher Secondary Education Cess (SHEC)‟ @ 1% on income tax shall be chargeable In case of Company Company For domestic company For foreign company Note: Particular Total income exceeds ` 1. 2.000 10% ` 5.5% „Education Cess‟ @ 2% & „Secondary and Higher Secondary Education Cess (SHEC)‟ @ 1% on income tax shall be chargeable Special rates of Income Tax On Short-Term Capital Gain (STCG) covered under Section 111A On Long-Term Capital Gain (LTCG) covered under Section 112 On winning of lotteries. [Sec.00.000 20% Above ` 8.00.010 to ` 8.00.010 to ` 5.000 but does not exceeds ` 20. 08000054359 20 Visit me at: http://bhavinpathak. being a women resident in India.000 30% Note: 1. being a resident in India.010 to ` 8.40.000 20% Above ` 8. crossword puzzles.000 Where the total income exceeds ` 20.40.bhavin@hotmail.00.A.00.000 ` 1. every artificial judicial person Upto ` 1.000 plus 30% by which the exceeds ` 10.000 NIL ` 1.00.000 30% In the case of every Individual.90. 2011-12 SUPER SUMMARY OF TAXATION APPENDIX INCOME TAX RATES FOR AY 2011-12 INCOME TAX RATES FOR AY 2011-12 (Estimated Time Allocated – 05 minutes) In case of every Individual or HUF or AOP/BOI (other than a co-operative society) whether incorporated or .000 NIL ` 2.010 to ` 5.5% 2.000 Where the Total Income exceeds ` 10.000 20% Above ` 8. 115BB] 15% 20% 30% Written by Bhavin Pathak Contact No.00.000 10% ` Send your views at: pathak.010 to ` 8. Total income exceeds ` 1.000 30% In the case of every Individual.00.000 plus 20% by which the exceeds ` 10. who is of the age of 65 years at any time during the previous year Upto ` 2. No surcharge is payable by the above assesse.caclubindia.90.Y. and below the age of 65 years at any time during the previous year Upto ` 1.000 NIL ` 1.000 10% ` 5.

com . 08000054359 21 Visit me at: http://bhavinpathak.Y. city in which house Assume 40% (For any other place) taken on rent Rent free Accommodation If nothing is mentioned or only Fair Rent Value given than assume that owned by employer and if Actual Rent or Lease Rent given then not owned by employer Rent free Accommodation If owned by employer and population not given then assume that in city of more than 25. 2011-12 (Estimated Time Allocated – 05 minutes) ASSUMPTIONS ASSUMPTIONS No. employee Gratuity Employee is not covered under Payment of Gratuity Act Pension Uncommuted pension Employees PF contribution Basic salary is gross without deducting employees‟ contribution Dearness Allowances It is not under terms of employment Dearness Pay It is under terms of employment Specified Allowances If expenditure not given assume that fully expended for (Travelling Allowances. 1. 1.bhavin@hotmail. Education facility Employer has no contract with the school and it is not maintained by employer Medical facility In any other hospital and exemption upto ` 15. 5. INCOME FROM SALARY Particulars Assumption Govt. 1. Send your views at: pathak. Assume non-govt.a. 9. 10. 2. 2. 1. 11. 8.caclubindia. 4. If nothing mentioned clearly in question only then make following assumptions.SUPER SUMMARY OF TAXATION A. official purpose Daily Allowances) HRA. 3./Non-Govt. 12. 6. 13.00.000 Interest free loan If rate of interest of SBI not given assume to be 12% p.000 INCOME FROM HOUSE PROPERTY Interest for self-occupied Loan was taken before 1/4/1999 property Recovery of unrealized rent Covered u/s 25A INCOME FROM OTHER SOURCES Debentures Non-listed at any recognized stock exchange SET-OFF OR CARRY FORWARD OF LOSSES Business Losses Non-speculation Business Losses Written by Bhavin Pathak Contact No.

Residential Status. spouses. . 08000054359 22 Visit me at: http://bhavinpathak. partner. 1. sister or lineal ascendant & descendant DEDUCTIONS Life Insurance Premium LIP on life of himself.Y. In Exam too read the question of Capital Gain twice before attempting it. House Property. sister lineal ascendant or descendant of such individual) INCOME FROM OTHER SOURCES Gifts (in money) (a) Spouse of the individual [Section 56(2)] (b) Brother or sister of the individual (c) Brother or sister of spouse of the individual (d) Brother or sister of either of the spouse or the individual (e) Any lineal ascendant or descendant of the individual (f) lineal ascendant or descendant of spouse of the individual (g) Spouse of the person referred to in clauses (b) to (f) CLUBBING OF INCOME Substantial Interest Individual. 1. brothers and sisters of the individual wholly or mainly dependent on the individual PROFIT & GAIN FROM BUSINESS OR PROFESSION Payment to specified persons Specified person means relative. VAT & Service Tax portion is very easy and too much scoring. Capital Gain is a bit tricky one so requires multiple reading and too much practice. INCOME FROM SALARY Meaning of Relative Member of household (a) Spouses (b) Children and their spouses (c) Parents (d) Servants and dependents Medical facilities and leave (a) The spouses & children travel concession (b) Parents. Just do it with Accountancy and Costing and you never know when you have completed the subject like Taxation. exempted limit and meaning of Govt. One should give atleast 2 hours each day to taxation along with Accountancy. 3. children of individual Particulars Prescribed fringe benefits EXPERT’S ADVICE Pulkit Gupta. spouse.A. TDS & Advance tax are the scoring portions too. In salary pay special attention to retirement benefits. director or person [Section 40A(2)] having substantial interest or relative of any such person (Any relative i. 1. No need to prepare separate schedule for it. parents (whether dependent or not). 4. 2011-12 SUPER SUMMARY OF TAXATION MEANING OF RELATIVES MEANING OF RELATIVES (Estimated Time Allocated – 05 minutes) No. spouse.caclubindia.. spouse. brother. spouse and children. Written by Bhavin Pathak Contact No. children. dependent children [Section 80D] (2) In case of HUF: in the name of any member Section 80DD & (i) Individual. 1.bhavin@hotmail. 2. parents. [Section 80C] In HUF: any member of family Medical Insurance Premium (1) Individual. employee. PGBP (Profit and Gain for Business and Profession) is very important for exam purpose and for professional purpose too. any member of HUF Section 80E Spouse.e. Set-off. brother and Section 80DDB sister (ii) In case of HUF. any brother. It is very useful in your professional life too and money wise too. CA Final Student        Taxation is not only the scoring but one of the most interesting subjects you will come across during Send your views at: pathak. 1. Its advisable to you to attempt it first if it comes as a separate section. Clubbing.

Rules and Forms Section Particulars (Sections referred to Finance Act.Y. 2011-12 PART II: SERVICE TAX SERVICE TAX ATAA GLANCE SERVICE TAX AT GLANCE (Estimated Time Allotted 30 Minutes) Important Sections. Manmohan Singh Basis of recommendation  To introduce value added tax as indirect taxation as a whole  To make tax revenue neutral  To widen tax base  As service sector contribute a lot to GDP so to generate Tax revenue from this sector Constitutional authority Entry 97 of List 1 empowers the union to levy Tax Acts governs Service Tax Written by Bhavin Pathak Contact Send your views at: pathak.SUPER SUMMARY OF TAXATION A. 08000054359 23 Visit me at: http://bhavinpathak. commencement and application Section 65(105) Taxable Services Section 66 Charge of Service Tax Section 67 Valuation of Taxable services for charging Service Tax Section 68 Payment of Service Tax Section 69 Registration Section 70 Furnishing of return Section 71 Scheme for Submission of Returns through Service Tax Preparer Section 72 Best Judgment Assessment Section 73A Service Tax collected from any person to be deposited with Central Government Section 73B Interest on amount collected in excess Section 74 Rectification of mistake Section 75 Interest on delayed payment of Service Ta Section 76 Penalty for failure to pay service tax Section 77 Penalty for contravention of rules and provisions of Act for which no penalty is specified elsewhere Section 78 Penalty for suppressing value of taxable service Section 80 Penalty not to be imposed in certain cases Section 93 Power to grant exemption from service tax Rules Particulars Related Section Rule 2 Forms Section 68 Rule 4 Registration Section 69 Rule 5 Records Section 70 Rule 6 Payment of Service tax Section 68 Rule 7 Returns Rule 7B Revision of return Section 70 Rule 7C Amount to be paid for delay in furnishing the prescribed return Forms Particulars ST 1 Application ST 2 Registration Certificate ST 3-3A Return TR 6-GAR 7 Payment of Service Tax Levy of Service Tax  Based on recommendation of Dr Raja. 1994) Section 64 Extent.bhavin@hotmail. Chelliah in Tax Reform Committee in 1990  Brought in existence in 1994 under the finance ministry of .caclubindia. J.

000 Cases in which Service Tax is payable by service receiver  Insurance Auxiliary  Units of Mutual Fund  Sponsorship Services  Service Received from a Person outside India  Goods Transport Agency Payment of Service Tax Proprietors and firms Others Quarterly basis on 5th day of Completion of Monthly Basis on 5th Day of Next Month and Each Quarter and 31st March for Quarter from 31st March for the Month of March January-March Note: For E-filing of Return the Due date is 6th rather than 5th in above cases. 2003 CENVAT Credit Rules. Penalty for late return filling If Return is Late From Due Date  From 0 to 15th Day: ` 500  From 15th to 30th Day: ` 1000  After 30th Day: ` 1000 + ` 100 per Day to a Maximum of ` 2000 Written by Bhavin Pathak Contact No.A.a. assessee shall charge Service Tax after crossing the turnover of ` 10. Due dates: 25th April and 25th October  Service Tax Return can be revised within 90 days from the date of filling of Return.00. from the date of default Note: E-Payment of Service Tax is Mandatory if Assessee is paying an amount more than `10.caclubindia.Y. 2006) SUPER SUMMARY OF TAXATION Functions of Director General  Ensure proper establishments and infrastructure facilities  Study on staff requirement  ST has been properly implemented in the field  Suggest proper measures to increase revenue collection  Simplify Service Tax collection Place to levy Service Tax At the place where service is actually utilized not on place where person who provides service Registration under Service Tax  Form ST 1  Get Registration Certificate within 7 days by filling Form ST 2  Registration must be done within 30 days after providing of taxable services.bhavin@hotmail. 08000054359 24 Visit me at: http://bhavinpathak. 2003 Export of Service .00. 2005 Service Tax (attachment of property Send your views at: pathak. 2011-12       Finance Act.000  Also. 1994 Service Tax Rules.00. 1994 Service Tax Rules. Registration Limit  Assessee must apply for Registration when his taxable turnover exceeds ` 8.000 Service Tax Return  Service Tax Return is filled on Half Yearly Basis on 25th Day after every six months. Discharge of payment  ST is paid Through GAR-7 Challan  Any Delay in payment of Service Tax attracts an Interest of 13% p.

08000054359 25 Visit me at: http://bhavinpathak.Y. in the case of e-payment) (In the last quarter due date is 31st March.000 Quick Flick Registration A. the person other than service provider) Input service distributor To obtain registration within 30 days Not availing exemption of small service provider Availing exemption of small servive provider To obtain registration within 30 days To obtain registration within 30 days from a date .com . (1 day grace. (includes few cases.caclubindia. No Grace) Note: E-payment is compulsory for all persons.SUPER SUMMARY OF TAXATION Exemption of services Service Provided by Following is Exempt if  Service Provided by him to RBI  SSP upto turnover of ` 10.00. in the case of e-payment) (In the last quarter due date is 31st March.bhavin@hotmail. when value of taxable service in a financial year exceeds ` 8 lakhs Payment of Service Tax Individual. 2011-12 Every person liable to pay service tax. (1 day grace. No Grace) 5th of the month immediately following the said calender month. proprietory firms or Partnership firms Others 5th of the month immediately after the said quarter. if service tax exceeds ` 50 lakhs in the previous year or in the current year. Written by Bhavin Pathak Contact Send your views at: pathak.

com Send your views at: pathak. to any person. consultancy or assistance in any branch of law. 2011-12 Value of Taxable Services Consideration is in money only. Then. SUPER SUMMARY OF TAXATION Consideration is not ascertainable. value is money charged + other consideration [Sec. Then.caclubindia.Y. Commercial training or coaching center means any institute or establishment providing commercial training or coaching for imparting skill or knowledge or lessons on any subject or field other than the sports. in relation to advice.A. 67(1)(ii)] Valuation rules Value of similar services to be determined by service provider [Rule 3(a)] Equivalent value of consideration to be determined by service provider on Costing Principal [Rule 3(b)] Value of similar services is not available Note: Rule 4 & 5 should be kept in mind while deciding the value APPLICABLE SERVICES FOR NOVEMBER 2011 EXAMINATION APPLICABLE SERVICES FOR NOVEMBER 2011 EXAMINATION (Estimated Time Allocated – 30 minutes) LEGAL CONSULTANCY SERVICE Legal Consultancy Service‟ means services provided  By a business entity. 08000054359 26 Visit me at: http://bhavinpathak. above amount is value [Sec. in any manner. with or without issuance of a certificate and includes coaching or tutorial classes  But does not include  Preschool coaching and training OR  Education that leads to award of qualification (Certificate/Degree/Diploma) recognized by law. 67(1)(i)] Consideration is not whole in .bhavin@hotmail.  Representational Services provided by any person to a business entity  Services provided by arbitrators to business entity Taxable:  Services Not Taxable: × × Individual  Individual Individual  Company/Firm/LLP (Representation Service)  × Individual  Company/Firm/LLP (Other than Representation Service) Company/Firm/LLP  Individual (Consultancy Service)  × Company/Firm/LLP  Individual (Representation Service) × Company/Firm/LLP  Charitable Institution (Representation Service) Company/ Firm/LLP  Charitable Institution (Consultancy Service)  Company/Firm/LLP  Company/ Firm/ LLP  COMMERCIAL TRAINING AND COACHING CENTERS  “Commercial training or coaching” means any training or coaching provided by a Commercial training or coaching center to any person. Written by Bhavin Pathak Contact No.

08000054359 It provides coaching Institute giving training/Coaching relating to sports activities has been specifically excluded from Scope of Commercial Training and Coaching Centers. Education that leads to any certificate which is legally recognized in India has been excluded from the definition of Commercial Training and Coaching Centers. Services provided by Recreational Training Institute shall be 100% exempt. diploma etc. Exemption does not apply to computer training centers.bhavin@hotmail. degree or any other educational qualification.caclubindia. they shall be liable to ST.  Coaching imparted to students of standards 1 to 9 is not taxable. Pre-School training & Coaching center have been excluded from the definition of Commercial Training and Coaching Centers. 2011-12 Tuition bureau YES School NO Preschool University/College/ICAI NO NO Vocational Training NO Computer Training YES Center Recreational Training NO Institute Points to ponder  Postal coaching or through correspondence is taxable and it will include the postal charges charged for rendering the .com Send your views at: pathak. But in case they provide other education with is not recognized.Com/CA is not liable for ST.  Institutes like the Institute of Chartered Accountants of India some time hire the services of other institutes to impart some part of training (like language or computer training) to the students undertaking courses for obtaining recognized degrees/diplomas (like Chartered Accountancy) from their institute.SUPER SUMMARY OF TAXATION Services Coaching Centers Sports Training Center Home tuitions Liable for Service Tax? YES NO NO Reason A. The exemption is subject to the condition that the receiver of such service (for example. 27 Visit me at: http://bhavinpathak. Fee of B. Only an Institute or establishment can be Commercial Training and Coaching Centers. they shall be liable to ST. Such services liable to Service Tax as an Individual are rendering services on behalf of an institution which falls within the definition of Commercial Training and Coaching Centers. and not to the commercial coaching or training center. But in case they provide other education with is not recognized. Thus. Thus School Fee is not liable for ST. Whereas the Institute of Chartered Accountants of India will not be chargeable to service tax because they confer qualifications recognized by law. the institutes or centers providing such part of training may be otherwise under service tax net.  Donation received by commercial training & coaching centre is not taxable as donation is not linked to specific trainee or training. Education that leads to any degree/diploma which is legally recognized in India has been excluded from the definition of Commercial Training and Coaching Centers. Written by Bhavin Pathak Contact No.Y. student) makes payment for the entire course or curriculum to the institute or establishment issuing such certificate. Services provided by Vocational Training institute shall be 100% exempt if affiliated to National council of Vocational training. 10/2003-such coaching or training is exempted from service tax which form an essential part of the course or curriculum leading to issuance of recognized certificate. diploma. Vide notification No.Com/M.  Study material value is not excludible otherwise than sale value of standard text book which are priced. Thus providing Services at the premises of service receiver can‟t be said to be one having any Institute/ Establishment.

com . OR (b) Unloading of cargo.. Also Include Does not include  Services Provided In Special Containers  Cargo Handling Relating to Export  Services Provided by Container Freight  Handling of Passenger Baggage Terminals  Mere Transportation  Packing And Transportation Only Value of taxable services  Service tax is payable on the entire amount received for the aforesaid services. is a taxable service. freight) of a vessel. sound or image. whether supplied on a media or electronically. were brought in the ambit of Service tax. Singing.A. Written by Bhavin Pathak Contact No. train.  Transportation of cargo is taxable only when it is through air/road/pipeline or other conduit. consultancy and assistance on the mattes of IT software and providing right to use IT software. aeroplane or other carrier‟. Points to ponder  Only customized software is covered.  Packaged or Canned software intended for single use and packed accordingly is not liable to service tax if following conditions are satisfied  Document providing the right to use is packed along with software  Importer has paid appropriate customs duties  The manufacturer/ duplicator/ the person holding the copyright to software has paid the excise duty on the entire amount received from the buyer. CARGO HANDLING SERVICES The term „cargo‟ means „the load (i. programming. including source code and object code. 08000054359 28 Visit me at: http://bhavinpathak. by a cargo handling agency in relation to cargo handling services. (d) Unpacking of cargo.bhavin@hotmail.e. designing. providing advice. recorded in a machine readable form. However in some cases here is an exemption granted from excise / customs duty for part of the value of the packaged software. Martial Arts or Hobby Classes) × Provided by central affiliated to NCVT × Vocational Training Other than above  Not for profit organisation  Postal coaching  INFORMATION TECHNOLOGY SERVICES Information technology software means any representation of instructions. However. (a) Loading of cargo.  Cargo Handling service is taxable in relation to all modes of transport. taxable only when the receiver of service exploits them for commercial or business purposes. Thus any goods which are meant for transportation from one place to another place by any mode of transport are known as „cargo‟. truck.  Services provided in relation to Information Technology (IT) software. such as development. service tax is not payable on charges which represent cost of goods sold by service provider. (c) Packing of cargo. up-gradation. data.caclubindia.Y. Taxable:  Services Not Taxable: × Sports coaching × Preschool coaching (Nursery or Play group) × Certificate course by recognised institute × Degree course by recognised institute × Coaching at residence of service recipient × Training to employee × Recreational coaching ( Send your views at: pathak. Such value which is exempt from excise would be liable for service tax. 2011-12 SUPER SUMMARY OF TAXATION  “Modular Employable Skill Courses” provided by Institute registered under “Skill Development Initiative Scheme” with the Directorate General of Employment and Training is exempt from whole of service tax. However. and capable of being manipulated or providing interactivity to a user. Packaged software sold off the shelf is leviable to excise duty. Any service provided (or to be provided) to any person. by means of a computer or an automatic data processing machine or any other device or equipment. “Cargo handling service” means.

 Stuffing and stripping of containers. Repairing and Handling of empty containers for shipping × lines. is a „taxable service‟. Sugarcane/ Rice)  Goods meant for cold Storage (e. who provides services to other licensed Custom House Agent Services Covered  Obtaining relevant documents (invoices. under the Customs Act providing service in relation to entry or departure of conveyances or Import or export of goods. Services provided by an Inland Container Depot (ICD) or a Container Freight such as Receipt.caclubindia. temporarily or otherwise.  Custom House Agent.  Services provided by Freight Terminal. Port Services if rendered within a Port) CUSTOM HOUSE AGENT’S SERVICES  Any service provided (or to be provided) to any person. license required for clearance of cargo. by a custom house agent in relation to the entry or departure of conveyances or the import or export of goods. weighment and measurement of export / import goods  Transportation of export goods to customs station or import good from customs station to Written by Bhavin Pathak Contact No. (2) When provided in relation to  Agricultural Produce (e.g. dispatch or delivery of cargo. (Storage and Warehousing Services.  Does not cover:  Representatives/ employees of an enterprise providing the above services to the Send your views at: pathak.bhavin@hotmail.  Transit operations by rail / road to and from serving . bill of lading)  Preparation of bill of entries  Arranging for execution of bond  Examination of cargo  Preparing shipping bill  Making payment of export/import duty  Clearing of import and export consignment  Loading/unloading of import/export goods from/at the premises of exporter / importer  Packing. 08000054359 29 Visit me at: http://bhavinpathak.  Temporary storage of cargo containers etc.  unloading.  Individual/ Proprietor/ Firms providing this Service shall continue to pay tax on receipt basis. Fish) Taxable:  Services Not Taxable: × Cargo handling services provided for freight in Special Containers/Non Containerized Freight.  Custom house agent is the person licensed..Y. 2011-12 Exemption: (1) Cargo handling service provided to a goods transport agency (GTA) for use by the said GTA to provide transportation service to a customer in relation to transport of goods by road in a goods carriage.. packing list. unpacking Services relating to agricultural Produce/good intended for cold storage. license  required for export. for all modes of transport  Cargo handling services incidental to Freight  Services of transshipment of Import Cargo from international to domestic  carrier Packing together with transportation of cargo or using services like loading.SUPER SUMMARY OF TAXATION A. Washing. × Transportation of goods × Marketing or canvassing for cargo for Airlines × Handling of Export Cargo/ Personal Baggage × Service of auction of abandoned cargo × Cargo handling services provided in the port (Port Services) × Supply of labour for handling the cargo (Manpower Recruitment and Supply × Services) Storing.

Discipline of Engineering  Industrial engineering  Automobile engineering  Mechanical engineering  Aviation engineering  Aerospace engineering  Electronics engineering  Computer engineering  Environmental engineering  Electrical engineering  Fabrication engineering  Metallurgical engineering  Geotechnical engineering  Chemical engineering  Hydraulic engineering  Civil/environmental engineering  Marine engineering  Agricultural engineering  Mining engineering  Aquaculture engineering  Telecommunication engineering  Architecture engineering  Biotechnology engineering Value of services Service tax is payable on the amount received for the aforesaid service. are not subject to service tax. 2011-12 SUPER SUMMARY OF TAXATION importer‟s premises  Sorting/ marking / stamping / sealing of goods on behalf of exporter / importer Value of taxable services  Service tax is payable on the amount received for the aforesaid services. Moreover. service tax is not payable on charges which represent cost of goods sold by service provider. the value of the taxable Service Tax shall be 15% of the lump sum amount charged to the client. are not subject to service tax. consultancy or technical assistance in the disciplines of both computer hardware engineering and computer software engineering shall also be classifiable under “consulting engineer‟s services”. Value of taxable services Service tax is payable on the amount received for the aforesaid services (excluding exempt services). However. However. It has been decided that in such cases the sub-contracting Custom House Agent will not be required to pay Service Tax on the bills raised by him on the main Custom House Agent. is taxable service. expenses (which are liability of the service receiver) incurred by the service provider and later on recovered from service receiver are not subject to service tax. expenses (which are the liability of the service receiver) incurred by the service provider and later on recovered from service receiver.bhavin@hotmail.  In case of “turnkey” imports and exports where a lump sum amount is charged from the client for undertaking various services. by a practicing chartered accountant in his professional capacity in any manner.  Individual/ Proprietor/ Firms providing this service shall continue to pay tax on receipt basis. However. service tax is not payable on charges which represent cost of goods sold by the service provider. PRACTICING CHARTERED ACCOUNTANT’S SERVICE  Any service provided (or to be provided) to person. service tax is not payable on charges which represent cost of goods sold by service provider. expenses (which are a liability of the service receiver) incurred by the practicing chartered accountant and later on recovered from the service receiver. CONSULTING ENGINEER’S SERVICES Any service provided (or to be provided) to any person. Written by Bhavin Pathak Contact No. by a consulting engineer in relation to Send your views at: pathak. would not be chargeable to Service Tax. The Service Tax will be payable by the Custom House Agent who provides the actual service to the client and raises the bill to the client.Y.  Services provided by a Custom House Agent in relation to goods exported by exporter are exempt from levy of Service Tax.A.  The payment received by the Custom House Agent from the Shipping Lines for Canvassing of Import/export . consultancy or technical assistance in any manner (in one or more discipline of engineering including the discipline of computer hardware engineering) is a taxable service. Services provided by a consulting engineer in relation to advice. In such cases. Moreover. Exemption:  In case of sub-contract – It is possible that the sub-contracting Custom House Agent raises the bill on the main Custom House Agent who in turn raises the bill to client. 08000054359 30 Visit me at: http://bhavinpathak. Moreover.

it is not a “manpower supply service”. MANPOWER RECRUITMENT OR SUPPLY AGENCY’S SERVICES Any service provided (or to be provided) to any Send your views at: . The expression “recruitment or supply of manpower” also includes (a) Service in relation to pre-recruitment screening. However. Written by Bhavin Pathak Contact No.  The contract should be for supply of manpower.g. (b) Verification of the credentials and antecedents of the candidate.bhavin@hotmail. IIMs.Y. and service tax is liable on services provided by such institutions in relation to campus recruitment. Points to ponder  A manpower supply agency provides truck drivers to a transport undertaking for carriage of goods whether temporarily or otherwise is exempt from the whole of the Service Tax. cannot be taken as service provided by consulting engineer. are not subject to service tax.  It is not necessary that the concern rendering service should be a commercial concern. by a manpower recruitment or supply agency in relation to the recruitment or supply of manpower (temporarily or other-wise) in any manner. is a taxable service. and (c) Authenticity of documents submitted by the candidate. floor polishing). 2011-12 Points to ponder  Service provided by unqualified engineers cannot be taxed under “consulting engineer‟s services.  Service provided by a person who is holder of certificate from an industrial training institute run by Ministry of Labour and Rehabilitation. IITs) fall within the definition of „manpower recruitment or supply agency‟.SUPER SUMMARY OF TAXATION A. is subject to service tax. Value of taxable service Service tax is payable on the amount received for the aforesaid service.  Educational institutions (such as universities. expenses (which are the liability of the service receiver) incurred by the service provider and later on recovered from the service receiver.  Amount collected by an agency for making available bio-data/resume of prospective candidates.caclubindia. If the contract is for executing some work (e.. 08000054359 31 Visit me at: http://bhavinpathak.  Research & Development Cess (Cess payable on import of technology) is allowed as deduction from value of taxable Service provided.

 Need for VAT in India  Avoids distortions in the economy due to uniformity all across the channel.  Lowering tax burden.  Accounting Send your views at: pathak.  Non integration of central VAT with state-VAT.  Transparency  Better revenue collection and stability.  Credit of input taxation leads to cost efficiency.  As commonly understood this is a method by which final consumer shall be taxed at different stages of production and distribution in various installments. Written by Bhavin Pathak Contact No.  VAT is just and logical way of taxing all dealers in equitable manner whereby all dealers share burden of tax.  Better accounting systems.caclubindia. „Value Added‟ is the difference sales and purchases of the business.A. and indirect subtraction method. 2011-12 SUPER SUMMARY OF TAXATION VALUE ADDED TAX (VAT) PART III: VALUE ADDED TAX (VAT) (Estimated Time Allotted 30 Minutes) VAT-at a glance  Under the system of VAT the sales tax levied and collected at each stage of sale only the value added at every stage.  This system leads to easy computation and compliance.  Variants of VAT: VAT could be levied under three variants. The value added tax is based on the value addition to the goods. The subtraction method could be further divided into direct subtraction method.  No tax evasion.bhavin@hotmail.  Methods for computation of VAT: VAT is form of a sales tax and is charged at each stage on the „Value Added‟ to the goods. invoice method (tax credit method) and subtraction method. and the related VAT liability of the dealer is calculated by deducting input tax credit from the tax collected on sales during a particular period.  Concept of input tax credit: The main feature of system of VAT is that it provides the benefit of set off of input tax from the main output tax. For this difference between the sale price and purchase price is taken as value added and a tax is imposed at every level where there is some value addition. Consumption variant.  Simple method.Y. Gross product variant.  Demerits of VAT  VAT does not cover services.  Merits of VAT  Eliminates multiple-taxation. The three commonly used methods are addition method. 08000054359 32 Visit me at: .  Prevents cascading effect (multiple-taxation) by providing credit of Input taxation.  Cost of administration for government. Income variant.  Exemptions on goods. intermediate subtraction method. There are several methods to calculate the „Value Added‟ to the goods for levy of tax. These variants could be further distinguished according to their methods of calculation and they are addition method and subtraction method.

Luxury Goods 5. 2. They are: (a) Large Number of Rates (c) Burden of Additional Taxes (b) Cascading Effects (d) Tax Evasion Demerits of VAT  Increase in Working Capital Requirement  Increase in Operating Costs Variants of VAT (1) Gross Product Variant Methods of computation of VAT Methods of computation of VAT Subtraction method Aggregating all the factor payments and profit Invoice method Addition method Direct subtraction method Intermediate subtraction method Deducting purchase value inclusive of tax from the sales and taxing difference between them  Increase in Paper work and Record keeping  Problem of Interstate Sales (3) Consumption Variant (2) Income Variant Deducting tax on the inputs from tax on sales Deducting aggregate value of purchase exclusive of tax from the value of sales exclusive of tax. Precious and Semi-precious Metals or Stone. 3. All other Goods not Listed in above Part.caclubindia. Rates of VAT Sr. 4. 2011-12  Subsequently introduced in 130 Countries  In India. Need of VAT Due to adverse effects in the current system of sales tax VAT was introduced. VAT was introduced in the year 2004 Basic Concept of Value Added Tax (VAT) The term “Value Added” refers to Increase in Value of Goods and Services at each stage of production and VAT is basically a tax to be levied on the value added by an organization at each stage of producing Goods or rendering Services. Unprocessed Agriculture Goods & Goods for Social Importance. Particulars No. 08000054359 33 Visit me at: http://bhavinpathak.SUPER SUMMARY OF TAXATION Historical Background  Initiated in Brazil in 1960  In European Countries in 1970 A. Inputs Used for Manufacturing Send your views at: . 1. Accounting entries at the time of: Purchase Sale Purchase A/c Dr Customer/Bank A/c Vat Receivable A/c Dr To Sales A/c To Supplier/Bank A/c To VAT Payable A/c Rate of Tax 0% 1% 4% 20% 13% Dr Set Off VAT Payable A/c To VAT Receivable A/c Dr Written by Bhavin Pathak Contact No.

who import goods into the state (2) Manufacturers (3) CST Dealers (4) Dealer with turnover greater than ` 5. The evaluator is in a completely different mindset when he sees a 100% solved answer sheet. It‟s tricky and even the best of the best don't get 100% correct solution on most occasions. Composition Scheme  Optional scheme for Small Dealers  Rate of Tax applicable 4% Role of ICAI  Guidance Note on accounting of VAT  Debates and Seminars conducted at various branches  National and State level Conferences EXPERT’S ADVICE Assessment: Self/Deemed Assessment  Set off not allowed  Dealer not eligible to issue Tax Invoice Role of CA  Record Keeping  Tax Planning  Holding Departmental Audits  External Audit on VAT Records Sneha. It will work wonders. Even if your solution is 50% wrong your provisions can fetch you 90% marks. so needs regular revision. Learn the theory word by word and just paste it in your answer sheets. Because the teacher is assured that the students has the knowledge.A. IPCC-All India Rank: 4th.  It would be preferable if you can memorise the section numbers. Possibility of failing is almost washed away. No matter what people say but the truth is it boosts your score. institute's module and selected questions from a reference book (use Girish Ahuja or V.5 marks. Hope your handwritings should be legible.bhavin@hotmail. ALL THE BEST Written by Bhavin Pathak Contact No.  Keep on revising the . Return filling:  Every registered dealer is required to file the return duly signed in prescribed form. You might get confused in practical part if you start with it coz of nervousness.00.  Try and solve 100 marks paper. CPT-All India Rank: 6th. The evaluator also knows this fact but even if you write only those two lines the he might give you just 2 or 2. PROVISIONS  The practical questions designed by ICAI have high probability to make us fall into trap. So learn how to stretch and shrink an answer giving no scope to the evaluator.  Stretching and Shrinking: Many times in theory answers we don't have much to write but try and learn the trick to adjusting the answer according to the marks allotted. you will find the journey beautiful. Tax is a very slippery subject. PRACTIAL ANSWERS  Solve it neatly. 2011-12 Input Vat Credit: Tax paid or payable on purchase of Goods from registered dealers SUPER SUMMARY OF TAXATION Output VAT Credit: Tax Chargeable or Charged on the sale of Goods Essential for set off:  Registered dealers only  Tax invoice  Maintenance of Accounts Registration under VAT Registration is obligatory for (1) Importers. Taxation – 87 marks AT THE TIME OF PREPARATION:  Notes are a strict requirement. It will be a boon for you at the time of revision because you won‟t need to get back to the book at all. Wrong section number can prove fatal to your answer. Scanner is a must. Solve the scanner. (Handwriting need not be beautiful but decent).  Better not go for digging into too many questions at this level. Make a separate notebook and write down various section numbers along with its provision.K Singhania's book). But quote a section number only and only if you are 200% sure about it. No need of decoration but cleanliness is always preferred. So start with some theory till your nerves settle because it‟s a boiling hot exam environment.  Return should be filed Monthly/Quarterly as prescribed along with challan. Working notes must be clear . It can slip from your mind as well as your mark-sheet anytime. Try to present the answer point wise.  In Practical answers--if you have time then mention the provision along with the section number in working notes.caclubindia.This will be more than enough.  Use only institute's material for Indirect Tax part (Service Tax and VAT). It‟s very easy and scoring at the same time. 08000054359 34 Visit me at: clear as possible. Develop an interest.Y. It works and it works wonders. Suppose a question is for 4 marks having just a 2 line answer. AT THE TIME OF EXAMS: THEORY ANSWERS  Start with theory Send your views at: pathak.000 On registration TIN is issued by the Sales Tax Department.

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